Market Report: Is Mothercare taking baby steps towards future sale?

Is adoption the next step for Mothercare? Investors in the mother-and-baby retailer were hoping so yesterday after the struggling high street stalwart bounced up the mid-tier index following rumours it may be attracting the attention of private equity.

Despite it hardly being a fresh idea, the vague speculation – which suggested a possible price could be in the region of 200p a share – prompted Mothercare to shoot up 19.5p, or 14.99 per cent, to 149.6p.

Although talk of potential bid interest from private equity has been rarely far away, the idea has been given new impetus by the crash in the group's share price. The retailer has issued three profit warnings in 2011 alone, leaving it more than 75 per cent lower than at the start of the year.

Not everyone was impressed by the mutterings, with dealers playing down the takeover talk by pointing to recent director share buying. Meanwhile, others in the City were dismissive of the idea that a potential bidder would be interested in the retail sector given the well-documented woes facing shoppers.

Not for the first time this week, it appeared for much of the session as if the FTSE 100 would finally break its run of consecutive losses. Yet, with Fitch downgrading Portugal's credit rating to BB+, a late dip meant the top-tier index closed 12.21 points behind at 5,127.57, stretching its losing streak to a ninth day.

Traders found themselves lingering over lunch, as the closure of markets in the US for Thanksgiving left them with low volumes and little to do. However, there were some signs investors were regaining a little of their appetite for risk, with defensive stocks – such as pharmaceutical companies Shire (down 48p to 1,962p) and GlaxoSmithKline (down 23.5p to 1,329p) – dominating the foot of the benchmark index.

The utilities were also behind, including Centrica, the owner of British Gas, which was pegged back 2.5p to 285.8p in the wake of the return of vague speculation earlier in the week claiming it could make an approach for Germany's RWE.

The blue-chip miners were in positive territory, with Fresnillo and Vedanta Resources advancing 68p to 1,605p and 26p to 955p respectively. Meanwhile, Glencore ticked up 2.15p to 382.15p after the expiry of a number of clauses which enabled some investors to sell their stakes for the first time since its IPO.

It also means the commodities trader can issue new shares, prompting speculation it may do so to raise funding for a major acquisition – last night Xstrata, seen by many as an obvious target for the company, closed 15p stronger at 900p.

The revival of bid talk also helped Cable & Wireless Worldwide, after the telecoms group's recent plummet (it has lost over 50 per cent of its share price in little more than a week) persuaded Liberum Capital's Mark James to change his advice from "sell" to "buy".

The analyst said its dramatic fall meant a predator "could potentially make better use of CWW's infrastructure than existing shareholders". He went on to add that one of the first tasks for its new chief executive, Gavin Darby, would be "reviewing the list of bid approaches we suspect may be piled up on his desk", as CWW advanced 0.7p to 14.9p on the FTSE 250.

Thomas Cook flew up 47.03 per cent to 16.35p, although the tour operator remained nearly two-thirds weaker than before its crash earlier in the week after admitting it needed yet more funds. Tui Travel, meanwhile, shifted down 5.1p to 148.9p even though Numis Securities' Wyn Ellis said its rival's woes meant next year could be its "best summer ever".

After a Uganda tribunal said the energy group must pay $404m in capital gains tax as part of a long-running tax dispute, Heritage Oil slumped 9.6p to 160.4p, despite analysts claiming the decision came as little surprise. They said the real focus should be on an upcoming international arbitration hearing concerning the issue, which is to be held in London.

Fans of the smaller oil explorers had a lot to keep them busy, including a wild rumour suggesting Gulf Keystone Petroleum could become a takeover target by the US giant Exxon. Although it was by no means the first time such vague speculation has circled the group, it still ended up spurting forwards 14.82 per cent to 168.5p on the Alternative Investment Market.

Meanwhile, Bowleven – dubbed by some rather optimistic types the "new Tullow Oil" – slipped 14p to 1,236p despite announcing a new discovery off the shore of Cameroon, with Evolution Securities criticising the results for being "far from conclusive".

However there was a better reaction for Max Petroleum, which climbed 0.25p to 12.75p after it said tests suggested it had found a 28 metre-thick reservoir of black gold at its Zhana Makat field in Kazakhstan.

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